Shell Game: Biden Admin Trying To Spin That The Economy Is Great, By Changing Economic Terms

By Charles Susswein | Tuesday, 26 July 2022 01:15 AM
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Shell Game: Biden Admin Trying To Spin That The Economy Is Great, By Changing Economic Terms

The definition of an economic recession is commonly understood to be an economic decline, which is commonly identified as by a fall in GDP over two consecutive quarters.

Yet it's time for the Biden administration in the White House for a new definition. This redefining of "recession" arrives as a report on GDP is expected Thursday.

"What is a recession?" The White House posted in a question on their blog on Thursday. The redefining of the term will suggest that if the GDP growth drops for a second straight quarter, the White House won't have to call it a recession.

Talking to Meet the Press on Sunday morning, Treasury Secretary Janet Yellen announced that "A common definition of a recession is two negative quarters of GDP growth," continuing to say that "many economists expect second-quarter GDP to be negative. First quarter GDP was negative." She recently announced the Biden administration "was wrong" on inflation forecasts.

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"While some maintain that two consecutive quarters of falling real GDP constitute a recession, that is neither the official definition nor the way economists evaluate the state of the business cycle," the White House wrote.

"Instead, both official determinations of recessions and economists’ assessment of economic activity are based on a holistic look at the data—including the labor market, consumer and business spending, industrial production, and incomes. Based on these data, it is unlikely that the decline in GDP in the first quarter of this year—even if followed by another GDP declined in the second quarter—indicates a recession."

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It's highly possible that in redefining the word, the White House is under the impression that a negative GDP report for the second quarter will be declining Thursday, after a first-quarter negative report.

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According to the Bureau of Economic Analysis, the "Real gross domestic product (GDP) decreased at an annual rate of 1.6 percent in the first quarter of 2022." They note further that "In the fourth quarter of 2021, real GDP increased 6.9 percent."

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While the White House acknowledges both that the standard definition of a recession is a decline in growth for two consecutive quarters and that the first quarter of 2022 revealed a decline, they aim to give further context that can be used to say that the second quarter of negative growth does not show a drop.

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They say that "while inflation is highly elevated, real spending is still growing, powered by one of the strongest labor markets on record and an elevated stock of household savings." They further seek to mitigate the first quarter declined by stating that "Far from being a broad contraction, the negative estimate of the growth rate was a function of inventories—one of the noisiest components of GDP growth[2]—and net exports, in part reflecting our economic strength relative to that of our trading partners, as well as less snarled global supply chains."

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